) recently narrowed its guidance for the first quarter of
The company now expects revenues to decline by 7% - 9% compared
to the earlier projection of a decline of 5% - 9%.
Management had earlier projected revenues to decline as a result
of the program timing in the military vertical market and
continued softness in sales to wireless customers.
The company expects revenues from wireless segment to move lower
across multiple geographies due to continued inventory depletion
and softening demand in the second half of 2011.
However, as the quarter progressed, Altera experienced a more
pronounced and broader than anticipated inventory adjustment
related weakness leading to a more significant decline.
Earlier, earnings estimates declined significantly with the
release of fourth quarter results after the company provided a weak
guidance for the first quarter of 2012. Altera has a large exposure
to the telecommunications industry, in particular China. The recent
slowdown in China has adversely impacted the company's business
with no relief in the forthcoming quarter.
The new guidance implies revenue guidance between $416.5 million
and $425.9 million compared to the previous forecast of $416.5
million and $434.9 million.
Nevertheless, Altera continues to expect that revenue in the
second quarter of 2012 will be above first quarter levels. The
book-to-bill remains above 1.0 for the quarter.
The guidance had a minimal impact on stock price which inched
just 0.73% in regular trading and 0.21% in after-market trading to
close at $37.50.
Altera is expected to report first quarter results on April 19,
2012. We do not expect a drastic improvement before the second half
of 2012. The weak guidance prompted us to downgrade our
recommendation to Underperform from Neutral in January.
We continue to maintain an Underperform recommendation on
Altera. Currently, we have a Zacks #3 Rank on the stock which
translates into a short-term rating of Hold.
ALTERA CORP (
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